At 24 I took on the position of chief financial officer of a borderline-bankrupt lumber and building materials retailer. Quickly, I ended up managing all the day-to-day operations of this struggling four-store building supplier. It was here that I learned how to:

• Maximize the use of cash and buy time to give a business a chance to survive
• Revitalize company culture, boost energy levels, and build a team to drive a successful turnaround
• Identify intelligent risk opportunities that a team could translate into positive cash flow, revenue growth, and profits

In addition to turning the business around, I successfully negotiated the purchase of a larger competitor out of a contentious bankruptcy proceeding using no existing working capital. I then successfully merged the two businesses and profitably grew sales ten-fold over the next six years. Now, that’s what I call a turnaround.

With time, I have sharpened these skills, developing the following ten-step turnaround approach that has helped me save countless troubled operations and leverage growth opportunities.

1. Assess the situation and alert all key players

Whether you’re transferred in or brought in as a new hire or consultant, as a clear-headed, independent leader you’re in a unique position to a) analyze the situation, b) identify the causes of the problems, and c) make the tough decisions that haven’t been made, but desperately need to be made.

However you arrive at the situation, you will most likely find a team that is confused, standoffish, scared, and likely filled with anger and distrust. It’s up to you to turn things around, and to start you’ll need to overview the situation and notify all stakeholders that it’s time to take swift and serious action.

2. Take control of cash and spending

Cash is the lifeblood of any business, so you will need to meet with the CFO immediately and quickly assess the company’s cash position. Some questions you might want to ask include:

• How much cash is there?
• Who has spending authority?
• What’s the burn or spend rate?
• Is more cash going out than coming in? If so, how much can the company spend before it’s too late?
• Are there proper controls and procedures to approve and spend money?
• What reporting and cash flow projections are in place to enable management to properly manage cash?

You need to walk away from this meeting comfortable that there isn’t an imminent crisis, and that you have the proper reporting, controls and procedures in place for you to control cash and avoid costly surprises. If you don’t feel comfortable with what you discover, you need to make cash and the preservation of cash your top priority.

3. Establish a clear line of communication

It’s crucial that you meet with your executive team, and then with the entire organization as a team, preferably in person, on day one. If you have associates located far from company headquarters, travel to their locations (e.g. distribution centers, regional offices). If your time or resources are limited, conduct a conference call/town hall meeting. Whatever you do or wherever you go, make sure that you address the entire team.

Introduce yourself, first to the team as a whole and then individually. The idea is to start a conversation and begin to build trusting relationships. Tell the team what you do and don’t know about the situation. Listen, and let them talk; it may be the first time anyone has taken their concerns seriously. When they ask questions, its okay not to have all the answers; you are new at the position, after all.

Take in all of their questions and concerns. Be honest and answer the best you can. Tell them that you will follow up with answers you don’t know that day. Have someone take notes for you during the meeting. And make sure that you actually follow up with the answers to all their questions within a reasonable time either during or after the meeting. When you do follow up, make sure your answers reach the entire team.

Finally (and this is critical), establish a regular and reliable timetable and mode of communication moving forward, so that everyone knows that you will keep them updated on the situation and that they won’t be left in the dark. While some updates may involve emails or reports, they work best when they are personal and frequent. Once you have started the conversation, it’s crucial that you continue to build bridges and strengthen your relationship with the entire team.

4. Address immediate issues to stabilize the business, and boost morale and energy levels

Ask the team what issues or roadblocks exist to successfully conducting business today. Your immediate goal is to identify key issues that have been left unresolved and are directly impacting the day-to-day operations of the business or cash flow.

Some examples of potential problems a struggling business might be facing include:

• Vendors that won’t ship
• Utilities or critical services with shutoff or cancellation dates
• Truckers that won’t pick up or deliver orders
• Vacancies in key positions with significant workloads left unaddressed
• Customers holding payment because of issues left unresolved
• Legal commitments not being maintained, exposing the business to severe legal action and/or penalties
• Trust taxes left unpaid, exposing the company and officers to substantial interest and penalties or worse
• Basic decisions left unresolved – a management team frozen in fear

Raise these concerns with the team. Most are looking for help and direction, and many of these types of issues can be resolved quickly through communication, especially when the entire team is engaged in the discussion. Left unresolved, these issues drain positive energy and can be a major contributor to negative morale, not to mention the impact they can have on customers and the business overall.

By taking the lead and fixing these pertinent issues quickly, you will not only help the business but show empathy for what the team is living through on a daily basis. This will help you build your relationship with employees and establish a new tone and energy level within the business, all critical components to a successful turnaround. Your actions (or lack thereof) set the tone and energy level for the entire business.

5. Gather information about the business from top to bottom

You should be gathering intelligence from the moment you have your first conversation with the team, continuing through every meeting and one-on-one interview you have going forward.

Engage with the total organization: from top management all the way down to the front lines. Listen to what people say. In all of my experience with turnarounds, I have found that the people on the front lines often have a clearer understanding of the problems a business is facing, but it’s possible that no one has listened to them before or invited them to be part of the solution. Discounting the perspectives from the front line is a symptom of managerial dysfunction.

In every one-on-one, ask employees to share all reports, either internally or externally generated, that reveal detailed information about how the business is performing. Ask them to walk you through each report so that you gain a clear picture of what information is available in the business, how it flows within the business and how it is used to manage the business. Asked to be copied on reports that you determine are critical to the operation of the business and/or would keep you informed as to how the business is truly operating. This will help you become familiar with the business quickly and gain a better understanding of what reports are available to you and the team in executing and tracking the success of your turnaround.

By talking with as many people as you can and by checking and verifying information with multiple sources, you will soon learn who is on top of their job, who you can trust, and whether what employees tell you is likely factual or not. Remember, it’s not just you sizing them up; they are sizing you up, too. Until they feel comfortable with you and can trust you, they likely won’t tell you everything or you won’t be given all the reports. Assume this up front and verify as much as you can with as many people and sources as you can until you figure out who’s who on the team.

6. Diagnose the situation and start to formulate a long-term turnaround strategy

When you get to know the team, study their reports, and meet with customers and vendors, you will start to form a clearer picture of what challenges exist within the company, what issues need to be addressed, the path to follow, and the people capable of helping you lead the charge.

Sometimes the answer is staring you right in the face. Sometimes it’s buried in the culture of the organization, past leadership deficiencies or a tepid energy level. Sometimes its strategic miscalculation, or poor or lazy tactical execution. Most of the time, it’s all the above.

More often than not, the people are the major factor in driving a turnaround. Identifying the key players on the team and empowering them to do what they do best could be just what the company needs to stay afloat. You’ve got the perfect entry to wipe the slate clean, set expectations and hold people accountable for performance. If you’ve got the right people and you properly support them in their efforts, remove roadblocks, and create a culture of communication, fairness, impartiality and urgency, then a turnaround is more likely to occur. If you don’t have the right people, then, next to cash management, finding them is a top priority.

7. Build buy-in above and below along the way

While you are engaging the board or stakeholders of the business with what you are finding, and building consensus around potential solutions, by this point you will have likely also identified and built a working relationship with your direct reports and the entire team.

Ask them to participate in your process of analysis and authorship of the turnaround strategy. Once the plan is greenlit, you will need the team’s help to execute it. As part of the process, address their concerns, talk through alternative solutions, and reach resolutions.

In the end, you have to make a decision and lead, After all, business isn’t a democracy. But you can do this more effectively if you have given everyone a voice and an opportunity to have input and in the end, hear why you made the decisions you have made.

8. Formalize a goal-oriented plan

By now you understand the key issues and opportunities that, if addressed, would have the greatest impact on the current state of the business. The team has done the necessary research and due diligence to understand the resources required, level of effort, execution timeline of each initiative, and the payback period. Focusing on the opportunities and issues that have the greatest impact to the business, that fit within your constraints on cash and resources, and have the best probability of success, you should identify no more than five-to-seven pivotal initiates for the company to rally around and execute. These should be initiatives that, if successful, would radically change the trajectory of the business. However, they should be limited to the point where the team can actually focus and most likely achieve success.

Additionally, through this process you should separately identify and address opportunities and issues that are simple, low investment, low-risk opportunities for the business. These may be managed and executed separately from the five-to-seven bigger pivotal initiatives you are building your turnaround plan around, but they may be equally as important.

9. Energize your team

The most critical component in any turnaround is communication. It starts on the day you enter the business and should be a hallmark of your management style throughout the process. Consistent updates are critical to the team, and they help to build and reinforce trust and quash the rumor mill.

To encourage full participation and create a sense of urgency, infuse your position with the power of your personal energy. Assign responsibilities and ownership. Set due dates. Direct your team to work together as one, moving forward unified, in the same direction, to reach common business and personal goals. This requires a kickoff, agreed-upon metrics and reports, consistent updates on progress and performance, and a clear understanding of how to conduct communication and reporting.

Celebrate wins! It lifts the team and helps to propel momentum for the remaining challenges. Turnarounds are tough. Taking time to recognize progress and successes brings the team together and makes everyone feel good, not only about what has been done, but what still remains to be completed.

As the leader, it is your obligation to support the turnaround and everyone involved, to resolve issues in a timely manner, and to update the team as a whole. You may be driving a lot of change, but people will best absorb that change and support it if they understand what’s driving it and the end-game.

Keep in mind, if you are not communicating, others may be stepping in to fill the void. And most likely, they won’t know what’s happening or why, or be managing their own personal agenda, which could seriously impact the success of your turnaround efforts.

10. Follow through until you’re in the clear

Turnarounds are a 24/7 undertaking, so you have to be a full-time leader. This is where some of the best-laid plans or even the most capable people fail—their analysis and strategy are solid, but leadership assigns the work and moves on without personally following up on the execution.

Don’t be fooled into thinking that just because you’ve met with the team, informed them of your plans, and reviewed their reports, that they now have full command of the turnaround effort and you can focus on something else. Follow through with the plan’s execution and keep monitoring benchmarks until you reach your goal. Stay engaged with the front lines and the rest of the team. You can’t lead a turnaround from a distance; you must continue to be engaged with all levels of the business, minding the details and monitoring the situation closely. In a turnaround you typically only have one chance to get it right. Manage that way.

If your company needs a turnaround, I’d love to talk with you. Please send an email or call me directly —

Bill Nebes
bill@nebesconsulting.com | (m) +1 (603) 305-7450

Download the PDF: The Ten-Step Approach to Leading a Successful Corporate Turnaround

Background
Identified as one of the “Top 50 Most Valuable Latin American Brands” by BrandZ, the client is an industry leader with over 1,000 locations throughout Latin America. On my arrival, the business was producing over $1.3B USD in sales and employed over 8,500 associates. The client’s target customer base represents over 65% of all Latin American families.

Challenges
After a long track record of sales and profit growth, unattended internal and external challenges created a downturn in performance. Internally, the company struggled with an erosion of its customer service standards, along with deteriorating store presentation, plan-o-gram, and visual merchandising standards – all of which negatively impacted their customers’ buying experience. Externally, changing market conditions and severe competition ate away at the client’s market share – a market that they historically dominated.

As it struggled to deal with multiple changes to its business structure, policies and procedures, and deteriorating business results, the chain suffered from low associate morale and unusually high employee turnover.

My Solution
Using my “Ten-Step Approach to Leading a Successful Turnaround”, I assessed the situation, performed due diligence, developed a 36-point turnaround plan, and presented it to the Chairman of the Board. The plan focused on the company’s business model, brand, competitive environment, customer and associate satisfaction, morale, and bottom-line performance. I designed the plan to improve customer satisfaction and regain market dominance; stop and reverse the sales decline; rationalize and control SG&A expenses; and return the business back to profitability.

Results
Upon implementation of my plan, the company experienced its first sales and profit increase in three years. The following year, the company continued its comeback, producing a +20% sales gain over the previous year.

If your company needs a turnaround, new leader or interim management, I’d love to talk with you. Please send an email or call me directly —

Bill Nebes
bill@nebesconsulting.com | (m) +1-603-305-7450

Download the PDF: Created a successful turnaround plan for a troubled giant in Latin America

Have you been chosen to lead a business through a turnaround? Or is a Board assessing your ability to become CEO of a troubled company? If yes, now’s the time to prepare for their first question: “What would you do in your first 30 days on the job?” The purpose of this article is to help you answer this question.

Background

Common conditions you may find on your arrival

• Executive management or the Board of Directors has recognized the need for a change at the top. You are the change leader.
• You are new to the business in trouble. Perhaps you are being brought in from the outside.Or perhaps you come from a different business unit within a bigger business. Either way you have a unique opportunity to reshape the future, not burdened by the past.
• There is a vision and business model in place. Maybe it was successful in the past but markets and times have changed and the business has not stayed ahead of the curve.
• Maybe it’s a startup and the founder has been unable to translate vision into execution and prove the model.
• The company has a financial plan, but there’s a big difference between plan goals and results. You find only perfunctory analysis of these variances. Remedial action has been weak or non-existent.
• The team is not focused or accountable for results, and not developing new ideas or initiatives to improve performance.

Sales and profit margins are down. Management has failed to reduce expenses or control spending. The company is losing money; the operations generate negative cash flow. This places pressure on accounts payable and they are aging out. Vendor relations are strained: they are confused, angry, and distant; and they are worried about the company’s sales performance and cash situation. In turn, product availability is tight.

Fast-moving products are in short supply. The sale of these products generated working capital during liquidation, but now these items are sold and have not been replenished. The only inventory customers find are slower-moving, less attractive items. Customers walk out without buying.

Turnover of personnel due to fear, uncertainty, and doubt has exacerbated the situation. Most levels of management are disengaged or lost. Associate morale is poor and people are scared, maybe even angry at the company and management. There may be associate turnover issues at all company facilities, and many of the more talented people have left the company. Remote and field operations are on cruise control, with little or no direction or support.

Most critically, there is little or no internal communication with associates, or externally with customers, vendors, landlords, and banks or financial institutions. Everyone is wondering what’s going on and assuming the worst. For most, relations have deteriorated due to lack of information or, even worse, broken promises or bad information.

Although there may be key strategic questions that demand attention, your first challenge is to stabilize the business and give the team time to address these longer-term considerations.

Due Diligence

You’re hired, but it’s prior to your first day at the office

Your due diligence begins during the interview process. But you may not get to the real answers until you’ve accepted the position. Obtain answers to background questions from the Board of Directors or the executive who is bringing you in. For example:

• What is the company’s financial situation? Is its cash position stable or in crisis? If in crisis, then cash is your prime area of focus [I identified this in my “Ten-Step Approach to Leading a Successful Turnaround.”] Set a meeting with your CFO and financial team immediately. Clarify the situation, define critical actions, and plan your next steps.
• What is the company’s vision? What is the business’s best opportunity for growth?
• What is the value of the business? What is the desired rate of return on investment?
• Has the company engaged third-party consultants or professionals? If yes, who? Meet with them and review their assessments, findings, and recommendations.
• Have they hired a public accounting firm? Do they require periodic or annual audits? If yes, review their reports and schedule follow-up orientation meetings.
• Does the company possess additional intelligence on competitors, market studies, or customer surveys? If yes, obtain and review their reports.

Use your findings to begin to build your understanding of the business, the internal and external environments, identify opportunities, define the challenges, and set the foundation for your turnaround plan.

Monday: Your first day on the job

This is a day of introductions and open discussions with your team. Tell them why you’re there. Tell them what you want to accomplish. And reassure them: you are counting on them to help you increase the productivity of the company. Ask for a list of critical issues: anything that demands immediate action. Learn as much as you can about the current state of the business.

• Meet with the CFO and financial team

Gain a clear understanding of the current financial situation, especially the status of cash, cash flow and the procedures around cash spending and management. Define and begin to address the hot issues: anything that demands immediate actions.

• Introductory meeting with executive team and direct reports

Ask everyone to introduce themselves. Introduce yourself and your mission: who you are, why you are there, and what you expect. Make this meeting a conversation, not a presentation. Ask the team about any burning issues that demand immediate attention. Support the team, hear their recommendations, assess the need, and set in motion corrective action. Emphasize that while the team creates and implements a turnaround plan, the business must meet customer expectations today and every day.

Orientation Business Review: Introduce to the team the concept of an Orientation Business Review. This will be a detailed status review between you and each functional leader, reviewing performance to date and actions in place to address issues, opportunities, and drive performance.   Provide a standard presentation template you would like all executive reports that own business functions to complete and return to you, along with examples of all the reports they use to manage their business, by end of day Friday so you can review it over the weekend. The template should be set up to provide you a complete review of their area of responsibility.

Using the template as a guide, hold an Orientation Business Review meeting with the entire executive team the following week to review in detail, each leader’s activities and results. This will better orient you; help you observe and measure performance, define issues and priorities, identify roadblocks and resources needed; and allow you to reinforce ownership and execution. Finally, business reviews will clarify objectives and stimulate leaders to get their jobs done. This meeting will then evolve into your Weekly Staff Meeting each week thereafter.

Turnaround Task Force: Communicate clearly to the executive team that (a) current performance and results cannot sustain the business and are unacceptable, (b) the direction must change, and (c) this will require the creation of a Turnaround Task Force. The participants will be you, the CFO, and the rest of the executive team, with supporting staff rolled in as necessary. The meeting frequency should be at a minimum weekly. You will be the meeting owner, chairing the meeting and driving the agenda. But have the CFO manage the preparation during the week with each executive report and support you in finalizing the agenda and chairing the meeting.

The goals of the Turnaround Task Force will be to:

1. Validate the company’s existing financial plan (e.g. Does it stand on a foundation of reliable information and assumptions?) and confirm it meets the current needs of the company.
2. Confirm ownership or assign ownership of the financial plan by functional leader.
3. Document and validate each functional leader’s game plan and initiatives status to meet and exceed their area’s financial plan objectives. This should be updated and confirmed weekly by the CFO, validating status and progress toward key milestones, with a clear understanding of the leader’s current overall shortfall (gap) or excess (cushion) to their plan objectives.
4. Summarize and maintain a company-wide accumulation of all functional area’s current initiatives, accounting of those initiatives, and the current shortfall or cushion to the overall company financial objectives. This master summary will be presented and reviewed in the weekly Turnaround Task Force meeting by the CFO, so that all have a clear understanding as to whether the company in total, is unfavorable to plan or exceeding plan objectives.

It will be the responsibility of the functional leaders to identify new initiatives to offset unfavorable performance and risks. The goal will be to identify and set in motion sufficient initiatives company-wide to build a cushion against total financial plan profit and cash goals. Even if a functional area is exceeding their plan objectives, the business owner should continue to search for opportunities as needed. This will help to offset fewer opportunities in another functional area. Besides the financial benefit, this will also encourage the management group to work together and function as a team, pulling for each other’s success. A critical aspect of any turnaround.

The CFO will work with each functional leader one-on-one during the week to drive performance and accountability. During the weekly meeting of the Turnaround Task Force, the CFO will call out and review total company progress, and then each functional leader will call out and review their weekly progress toward their assigned objectives.

Information from this weekly meeting regarding the total company’s status and performance can feed into your communication plan to all associates and key partners.

The CFO’s role with the functional leaders is critical and demanding. Beyond organizing and chairing the weekly Turnaround Task Force meeting, this person should hold a one-on-one review with each functional leader prior to the weekly meeting, validating status, progress, performance, and results. This person is your representative with the functional leaders to challenge them and hold them accountable for results. If you have concerns that the CFO doesn’t have the capability and stature in the company to do this job, it may be up to you to step in and ensure performance. Remember, this is a turnaround, and you don’t usually have do-overs or second chances to save a business.

• Town Hall Meeting for HQ’s

Arrange a Town Hall Meeting for all headquarter personnel in the afternoon of your first day on the job. Do this in a way that minimizes disruption to customer and field support.

Agenda:

1. Introduce yourself
2. Inform the team of the true performance of the business
3. Discuss many of the topics from the introductory meeting with your executive team
4. Announce the creation and purpose of the Turnaround Task Force
5. Ask for their feedback, comments and concerns; listen!
6. Ask for and answer their questions
7. Inform them how they can help
8. Ask them for their commitment to help
9. Tell them how you will keep them informed in the future

• One-On-One Orientation Meetings

Schedule one-on-one orientation meetings with all your direct reports and functional leaders of the business. Review the Org Chart and detail P&L making sure you are identifying all critical areas of the business.

Your agenda for each one-on-one orientation meeting should be to:

1. Introduce yourselves
2. Identify burning issues that need immediate attention
3. Ask the functional leader to provide background information, including:
   • An overview of their area of responsibilities, P&L, org chart, and review of their people
   • The meeting cadence used in managing their team
   • Key dashboards and reports used to manage the business
   • YTD P&L results for their functional area vs. plan
4. Ask what actions they have taken to correct unfavorable P&L variances.
5. Ask them what is going well or working?
6. Ask them what is not working?
7. Ask how you can help them? Are there roadblocks that need to be removed?
8. Ask questions or provide any additional input
9. As you start the one-on-one meetings, the team will be working on the templates you provided them earlier in the day for the upcoming Orientation Business Review. As the templates are completed, you can begin to use them as well in these one-on-one meetings.

Probe, identify, and validate the existence of proper processes and controls, and the execution thereof, whether proper checks and balances are in place, and any potential threat from key business risks. For example, is the company properly backing up all company data? Is there a review process and accounting reserve in place for inventory obsolescence? What is loss prevention’s analysis of shrink losses and the sku’s that comprise the greatest risk to loss? Are real estate leases being properly renewed, or are there substantial expired leases? Is there a disaster recovery plan in place? Are all taxes being properly reported and paid? And so on. Make sure you enter these one-on-ones having thought through what critical risks may exist for each functional area, so that you can be prepared to ask critical questions and validate that the business is under control. Many of these questions are basic. But ask them. You may be surprised at the answers!

Finally, give them the opportunity to ask questions or raise discussion points. Communication is a good thing and in most cases, desperately needed in a troubled situation.

The rest of Week One

Complete Day One activities that are still pending, including one-on-one orientation meetings and discussions with front-line employees to learn more about the street-level organization. Immerse yourself in the business. Travel to remote centers of employment or service for the company (i.e. call centers, distribution centers). Hold Town Hall Meetings at these facilities, using the same format as noted in Day One for the HQ’s Town Hall Meeting. Communication is critical to understanding the situation on the front-lines, address burning issues, focus the team, calm fears and provide much needed direction.

Send out a formal announcement of the Turnaround Task Force to the entire company, announcing the first full team meeting on Tuesday or Wednesday of Week 2 (this assumes Monday is a busy day set aside to deal with weekend store issues).

From your one-on-ones and other meetings you will begin to understand the company meeting cadence. Determine which meetings you may want to get directly involved with or change.

Begin to formulate a Company-Wide Communication Plan to keep the entire business team informed of and connected to company performance, progress on key initiatives, and reinforcement of how they can help. This is a very critical component of your turnaround efforts. You’ve got some basic communication vehicles established and in place, coming out of your Town Hall Meetings from your first day on the job. Leveraging the feedback and insight you have gained during the activities of Week One, target the completion of your formal communications plan as early as Week Two.

First 30 Days

Your first 30 days is a fast-paced and intensive business campaign. Your investment in enthusiasm and drive can create a dramatic improvement in energy throughout the organization with a corollary improvement in associate moral and increased productivity.

By now you understand the weekly meeting cadence and reporting structure, and are able to properly intervene on a daily/weekly basis to drive improvement of operations, set the tone, and accelerate results. Your continuing efforts will be to drive HQ resources to support increased productivity in the field.

Use the Weekly Staff Meetings to inform, discuss, drive performance, hold the team accountable, and set the tone for the business to perform on your agenda.

By now the Turnaround Task Force is gaining organizational strength, with planning and execution well underway. You and the team understand the status of the company and the results of efforts to push the business into favorable performance. You have put a robust project plan in place that identifies specific initiatives and tasks by functional area, with assigned owners. The CFO is validating, tracking, and monitoring progress to success. There is a regular weekly meeting of the team, designed to drive progress, establish accountability, and correct unfavorable performance. Progress reports are generated from the weekly meeting that feed into company-wide communications to keep the entire team informed, up-to-date and engaged.

Your Company-Wide Communications Plan is in place and being executed. You are receiving feedback from the field and seeing engagement at all levels of the business.

You are in the field at least one day a week, visiting stores (assuming the business in question is retail), distribution centers, administration, and call centers to introduce yourself, listen, dig, engage, and learn. Revisit major remote employment centers or problem locations as needed to dig deeper, meet more people, and learn what’s going right and what’s going wrong.

Identify and meet with your key customers. Listen to their feedback and concerns. Follow up and do what you say you will do. You are the new person on the block and they want to understand if you will be honest, effective, helpful, and trustworthy.

Finally, schedule and conduct introductory meetings with key vendors, landlords, financial institutions, legal and accounting professionals, and any other critical third-party partners. Their relationship is nearly as important as the relationship you have with your company’s employees. Take time to listen to them and respond to their concerns. Build them into your Communications Plan, keep them appraised of the situation, and ask them to provide whatever help they can or that you deem necessary. Most want to help and consider your company a critical component to their own business’s success. Bring them in and make them full partners in the success of your turnaround.

If your company needs a turnaround, a new leader or interim management, I’d love to talk with you. Please send an email or call me directly —

Bill Nebes
bill@nebesconsulting.com | (m) +1 (603) 305-7450

Download the PDF: A Guide To Your First 30 Days Leading A Business Turnaround

The 8-Step Approach To Closing Performance Gaps

At one client, I built a reputation for getting the job done. Of all the business units in the company, mine consistently achieved the best performance to targets. My discovery was simply this: I found success lies in your attention to the details and how well you execute. The purpose of this article is to share my thoughts on how you can make this work for you.

Whether it’s driving sales, improving margins, reducing operating expenses, or maximizing overall profit, the best way to take baseline performance and move it to a new level is to understand your performance gaps and then work with your teams to identify, define, and take advantage of new opportunities while reducing risks. Consider these eight steps to closing performance gaps in your business.

1. Understand current performance

Clearly define your current baseline results for each performance area you want to improve. The performance baseline is the consistent, average level of performance at which a particular metric operates. For example, let’s say your sales come in at a $100,000-per-day level on Friday, Saturday, and Sunday, but on Monday–Tuesday they come in at $60,000 and Wednesday–Thursday they come in at $80,000. What is your performance baseline for the week? Is it (A) $700,000 or (B) $580,000? The answer is (B).

I’ve seen management pick the highest performance level and begin their work from that number. From the get-go, they are not going to achieve their objective, because their starting point is way off mark.

This is a simple example, but my point is: you should not speculate on your baseline number. Whatever metric you hope to improve, understand its baseline performance so you have a strong starting point from which to improve. This will give you an honest appraisal of the performance gap you’ll need to fill.

2. Know your gap

Now that you have a clear understanding of your baseline performance and you know your target, you can calculate your gap. In my example above, if your target is $800,000 in sales per week and your consistent weekly baseline performance of sales is $580,000, then your gap to success is $220,000 in sales a week. A 37.93% increase is nothing to sneeze at, but they are paying you to achieve desired results. It’s time to get creative.

3. Identify Opportunities

Working with your team(s) as a group, brainstorm all of the possible initiatives you can to cover the gap of $220,000. As you list them out on a whiteboard, you may not know each initiative’s true weekly sales value. That’s okay. For this exercise, give it your best estimate.

In addition to estimating value for each initiative, also document the estimated level of effort for the team to complete the initiative, whether it needs IT resources, and the estimated timeline to completion. You may not have all of this information, but fill in the information you do have in hand and fill in the blanks as you gain more data. Create a master schedule listing this information for each initiative. Ultimately the business won’t be able to execute all initiatives. Use the information pertaining to cost, benefit, payback period, level of effort, time to completion, the need for IT resources to identify and prioritize the initiatives that should be pursued by the business to meet its objectives.

4. Know your risks

While compiling your potential initiatives, you will probably also identify risks that may hurt your baseline performance. Create a second list of all the negative things that could or will work against your efforts to increase sales by $220,000 per week. Determine how you will mitigate their effects.

5. Execute initiatives

Take both lists and assign owners. It will be their tasks, along with their teams, to properly vet each initiative and risk and then report all the information needed so that management can make an informed decision on the next steps to take.

Some of the initiatives will take more time than others to research. Others may already be underway and their completion date not far off. All will be at some stage of documentation that will allow you to know their true value in helping to close the gap.

6. Meet regularly for updates

Establish a regular meeting schedule with the entire team to review all of the initiatives and risks. Meet at least once a week. Instruct each owner to report on their progress. Use these meetings to remove roadblocks, coordinate action, drive accountability and manage performance.

7. Track progress

In conjuncture with the weekly meeting, maintain a master tracking schedule that calculates and identifies the current baseline performance, target performance, and size of the gap. Then list the confirmed opportunities, along with the confirmed risks, to get to a current gap (assuming you are still short of target) or cushion (if your net number with confirmed opportunities and risks exceeds your target). This is your roadmap to success and your key tool in tracking progress, driving performance and managing the team.

Make sure to keep your CFO and finance team updated on your progress. Once opportunities and risks are confirmed, they typically want to include these numbers in the company’s forecasts.

Also footnote the potential opportunities and risks that aren’t confirmed or reliably known. While these potential opportunities and risks aren’t calculated in the company’s forecast, you and the team should be diligently working them so that you can take advantage of a benefit toward the team’s goal, or eliminate a potential risk.

8. Lead for success

It’s your job as manager to encourage your team to uncover as many initiatives and risks as possible to give you a sizable cushion at your forecasted baseline. During the weekly update meeting, review each initiative and risk in detail, and make sure progress is moving as the team anticipated. To help you further your agenda, work with your peers in other areas of the company. For example: IT receives requests from all segments of the company; your department is probably one of many asking for help; be diplomatic and learn how to gain their support.

Anchor your documentation and estimations of the value and timeline of any initiative on your candid assessment of the realities you face. Irrational exuberance does not buy you bonus points. Share progress reports with both good and bad news with your financial planning team on a timely basis, so that they can update their forecast to management.

And remember, you are a business leader. It’s your job to motivate the team, get everyone to think outside the box, and explore new areas of opportunity. Motivate your team to “flip over all the rocks.” That is where you will find the treasure.

If your company is facing a performance challenge, needs a new leader or interim management, I’d love to talk with you. Please send an email or call me directly —

Bill Nebes
bill@nebesconsulting.com | (m) +1-603-305-7450

Download the PDF: The 8-Step Approach To Closing Performance Gaps

I’ve led many process improvement efforts for many companies over the years, but my experience at one stands out from the rest. The challenge I faced was to take this Fortune 200 business through a game-changing transition from their existing multiple enterprise systems and processes to a single process and platform for order entry and fulfillment.

The company’s brick & mortar stores, catalog, and eCommerce businesses were grown internally. Yet their B2B division, the part of company that sold to businesses, was built on both internal growth and acquisitions. Each of these channels had their own order entry and back-end systems. In fact, each had their own supply chain and distribution center structure. For example in a typical major USA market there was a distribution center that just shipped B2B customers. Just a few miles away, there was another distribution center that just shipped catalog customers. This created redundancies, duplication of effort, and waste in supply chain and inventory expenses. But if the company could simplify, streamline, and economize, this also offered a huge opportunity.

I was chosen to lead a 250-person, cross-functional team charged with bringing all channels onto one platform and ordering process that could accept, process, and ship orders throughout the United States. If successful, the savings would be huge in terms of fixed cost reduction. For example, it was estimated that the company could reduce the number of their distribution centers across the country by half. And they could subsequently reduce their inventory investment and carrying costs. What’s more, with a common, streamlined, and updated process across all channels they could most likely provide better, more seamless customer service. The project involved moving to a unified order entry and delivery system for all channels.

At the time, this process improvement was the company’s most important project. The stakes were high. If successful, the savings would be incredible. If we turned it on and we failed, the damage would be horrendous. We could always fall back on the old system, but that offered risks as well.

Additionally, our charge was to create a conversion model. To build it we had to gut, rebuild, and start up the company’s first multi-channel distribution center. While I owned both projects, it couldn’t be done without the tremendous help and efforts of the people reporting to me and the rest of the team. The project was massive and complex. But one lasting takeaway has stayed with me and is a hallmark of any process improvement project I’ve undertaken ever since.

Before you change anything, understand thoroughly a) how it works today and (b) how you want it to work in the future.

If you are the operational manager, you own the change. Ask the project team to give you a detailed analysis and flowchart of the process under construction: how it operates today, the change proposed, and how it will work after the change. Before you begin any changes, carefully review the analysis and accompanying flowcharts. Make sure you have a ground-level view. Question everything. Encourage the project team to anticipate and account for any potential roadblocks and detours. Ask: What’s the testing regimen before it’s turned on and what’s the backup plan if it fails?

Approve the plan only when you are satisfied it meets these criteria:

1. It is complete in every aspect.
2. It is practical and workable. Actually walk through each step of the proposal with the process improvement team.
3. It is as simple as possible. Sometimes we overcomplicate. That, in itself, could be a sign that there is not full understanding of how the process being changed actually works. The best improvement is the one that results in a streamlined, simplified routine that still accomplishes all of the intended objectives.
4. It is 100% complete and accurate. I can guarantee you that if the research and documentation is only 80% correct, the 20% that misses will place the success of your project in jeopardy.

Failure to execute at 100%, sloppiness, and/or lack of attention to detail will result in a flawed effort that will undermine and potentially slow down your move from one process to the next. Or worst case bring it to a standstill. So when you hear about system switch-overs that failed or companies crashing because they moved from their old system to their new system, it may be a hardware failure. But more likely than not, it’s a failure to completely understand how the system and process worked originally and how it will work under the new proposal.

It is also critical to understand thoroughly the traffic demands of your existing processes and system and how these compare to the increased activity your business will encounter under the new process. For this project, we were moving transactions handled by many systems to one order-entry platform. This was predicted to create a gigantic jump in activity that would have to be processed by one system. And we had to be ready and able to handle this.

The team’s performance was extraordinary. We came in on time and under budget. Most importantly, when we moved to the new process and system and activated the newly rebuilt multi-channel distribution center and system, it worked! Based on our success, the company has been able to reduce expenses, reduce distribution centers, reduce inventory investment and carrying costs, and improve customer satisfaction, all while growing the business. We successfully guided this Fortune 200 Company from Point A to Point B, because we knew where Point A and Point B were!

If your company needs process improvement, I’d love to talk with you. Please send an email or call me directly —

Bill Nebes
bill@nebesconsulting.com | (m) +1 (603) 305-7450

Download the PDF: Process Improvement – The One Thing You Must Consider to be Successful

Background

The client was a completely autonomous, standalone business, with over 50 offices in 33 USA metropolitan markets, employing over 1,200 associates, and producing hundreds of millions of dollars in annual revenue. A USA based, Fortune 200 business with international operations, acquired the business. The vision at acquisition was to cross-sell their respective product lines between the two companies’ customer bases. A road sales force of hundreds of salespeople, supported by 24-hour call center operations, and hundreds of field technicians combined to drive the client’s sales.

Challenges

The client, previously owned by an investment group, was experiencing small losses at acquisition. The new owner initiated a synergy study to integrate both companies’ administration functions, including computer systems, within the parent’s headquarters. Unfortunately, the planning and implementation of the integration was poor (see also my article on “Process Improvement: The One Thing You Must Consider to Be Successful”), resulting in a breakdown of operational execution, a reduction in customer support, and an erosion of morale.

Client associates were hopeful that being bought by a successful, vibrant, larger business would finally give them the resources needed to stabilize and grow the business. Instead they fell into despair and anger as the flawed business integration and software conversion damaged their business. The business deteriorated and the cash losses rose to over $1 Million per month.

The legacy Chairman of the Board and the CEO were removed, and I was chosen to step in and take immediate control of the business, reporting directly to the parent. My immediate goal was to stabilize the business and stop the losses. My secondary goal, working with the parent’s management team, was to determine if the client was a strategic fit for the parent and, if not, to lead the parent through a sale of the business.

My Solutions

I implemented my “Ten-Step Approach to Leading a Successful Turnaround”, to take control and lead a turnaround of the business. After a thorough and expedited review of the entire business, working with my newly formed team at the client, we developed and executed a game plan that held all offices nationwide accountable for P&L performance. Working together we identified revenue opportunities, costs savings initiatives, and innovative ways to improve operating results.

Within five months, we had stopped the losses and brought stability to the P&L and cash balances. With financial stability, we initiated a turnaround plan focused on eight critical short-term objectives, which we had identified as the most important things to accomplish to dramatically increase the productivity of the business. These were initiatives that were within our resources and ability to execute and would most improve the current operating performance of the business from our customers’, shareholders’, and associates’ perspectives.

The turnaround plan was anchored on a robust communications plan addressing all stakeholders in the business. This focused on explaining the true state of the business, our turnaround plan, and our progress against identified milestones. Additionally it gave all a vehicle to communicate directly with me and the executive management team. This allowed us to answer their questions, mitigate their anger, dispel rumors, and support the team in the best way possible to speed solutions and drive our turnaround efforts.

Results

While reducing and eliminating cash losses within months of my arrival, we also:

1. Brought stability to a poorly executed Oracle conversion
2. Moved the headquarters with hundreds of administration and call center associates to a more viable, long-term solution
3. Stabilized and improved customer support and service
4. Dramatically improved associate morale

In the end, we determined that the business was not a good fit with the parent’s strategic agenda at the time. So we sold the now stable and well managed business a year later.

If your company is facing a turnaround or major challenge, I’d love to talk with you. Please send an email or call me directly —

Bill Nebes
bill@nebesconsulting.com | (m) +1 (603) 305-7450

Download the PDF: Rescued a failed integration of a recent acquisition